Which of the Following Statements Is False

question 42

Multiple Choice

Which of the following statements is false?

• A) Because investment in permanent working capital is required so long as the firm remains in business, it constitutes a long-term investment.
• B) Because temporary working capital represents a short-term need, the firm should finance this portion of its investment with short-term financing.
• C) Temporary working capital is the difference between the lowest level of investment in short-term assets and the permanent working capital investment.
• D) The matching principle states that short-term needs should be financed with short-term debt and long-term needs should be financed with long-term sources of funds.

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Definitions:

Falsifiable

A principle that a hypothesis or theory must be capable of being proven false in order to be considered scientific.

Testable Predictions

Hypotheses or statements that can be verified or falsified through experimentation or observation.

Principle of Parsimony

A principle suggesting that one should not make more assumptions than the minimum needed to explain something.

Anecdotal Evidence

Information derived from personal stories, experiences, or observations, without scientific backing, often used to support or refute a claim or belief.